Financial income/revenue from investment income
You are an individual and receive taxable financial income in France.
You want to know what your obligations are regarding the declaring of the financial income for taxation purposes.
You are a tax resident in France and receive financial income from abroad. You want to know how to go about paying tax on this income.
Taxation in France
There are several categories of taxable financial income in France in the category “revenue from investment income”. These consist of interest or income earned on fixed income investments as well as dividends or other types of distribution.
All investment income, whether it originates in France or abroad, received by persons resident in France is subject to income tax in France.
New taxation arrangements have been in force since 1 January 2018.
There are two ways of taxing investment income in France:
- The single lump-sum deduction (PFU): investment income is subject to a single lump-sum deduction of 30%, 12.8% of which is the withholding tax and 17.2% is the social security contribution. This method of taxation is applied by default unless the progressive scale is taken as an option.
- Progressive scale option: as a departure from the PFU, it is possible to subject investment income to the progressive scale as an express and irrevocable option. The option is exercised for all investment income, it is not possible to have a mixed system combining the PFU and the progressive scale.
The single lump-sum deduction (PFU) is declared and paid by the paying institution on the 15th of the month at the latest following the payment of the income to the business tax service relating to the lead institution.
What happens if the income is paid by an institution based outside France? In this case, the taxpayer himself must declare and pay the PFU using form no. 2778 no later than the 15th of the month following the receipt of the income to the business tax service responsible for his place of residence.
Taxpayers can be penalised for late submission of the declaration no. 2778 or for late payment (a surcharge and default interest).
When preparing the annual tax return, you should report investment income in the general tax return and indicate the taxation method (PFU or progressive scale option).
NB: Capital gains realised by individuals on the sale of transferable securities or company shares are subject to the same tax methods as investment income (PFU or progressive scale option). The net capital gain subject to tax is comprised of the sale price amount, reduced by the purchase price of the securities, after subtracting any capital losses and the allowance for the duration of ownership.
Altexis offers you support relating to the declaration of your investment income in France:
- We can help you file your income tax return.
- We can help you submit your declarations for form no. 2778.